Answer:
(a) $3,444,444.44
(b) $11,160,000
Explanation:
(a) Effective purchasing power:
= Loan amount ÷ (1 + cumulative inflation rate)
= $6,200,000 ÷ (1 + 0.80)
= $6,200,000 ÷ 1.80
= $3,444,444.44
Therefore, the effective purchasing power of the $6,200,000 is $3,444,444.
(b) Lender should be repaid:
= Loan amount × (1 + cumulative inflation rate)
= $6,200,000 × (1 + 0.80)
= $6,200,000 × 1.80
= $11,160,000
Answer:
C. Liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities.
Explanation:
The liabilities are the responsibility with regard to the amount that is borrowed by someone from any other person or financial institution. It is a responsibility of a person to return the borrowed amount within the prescribed time along with the interest. Its time period is more than one year
Based on the given options, the option A, B and D are correct but option D is not correct as they have the specified date
Hence, the option C is correct
Answer:
Consumer Credit Legislation.
Explanation:
Consumer credit legislation demands that lenders provide potential borrowers with one or more measures of the cost of a loan.
Answer:
a. 12.60%
Explanation:
The information given above that can be useful is the Risk Free rate and risk premium to calculation of cost of retained earnings.
We know that the calculation of cost of retained earnings =Cost of retained earnings = Risk Free rate + risk premium
= 8.75% + 3.85%
= 12.6%
Therefore the correct answer is a. 12.60%
Answer:
True
Explanation:
When deciding whether to accept special orders, it is important that opportunity costs is considered by managers.
It helps managers to make a good choice and not regret later.
When deciding whether to accept special orders, it is important to compare and calculate what extra revenues that will be made against the extra costs that will be incurred.
Opportunity costs is actually a hypothetical cost which is incurred due to going for an alternative over the other available.
